It was supposedly an artificial intelligence in the form of a computer worm that could infect any electronic system, modify itself, "reproduce" and spread nearly uncontrollably. Basically an electronic life-form, one which took over the infected systems/ships and tried to eliminate organic life-forms.

From the Traveller Wiki:

The Virus is a living, thinking being that moves through the medium of electronic information and computing systems the way a fish moves through water.

The Virus is not a biological organism. Imperial scientists have taken to calling the Virus an 'Infomorphic Vampire' and consider it a sentient being, if not life, by the traditional definition.

Basically, it was the authors' toy to completely deconstruct the setting to allow them to change whatever they wanted - how tech works, ship designs, social systems, interstellar polities - nearly everything.

Yep - it was Traveller's counterpart to The Spellplague/Great Rain of Fire.

I can't think of any way to use this without "blowing everything up".Unless you put it into a historical "this started once, millennia ago, but it was stopped quickly and we think it was completely eradicated" - and maybe have the PCs trying to stop someone who is looking for a rumored surviving quarantined sample of the program.

While I did run games set during the New Era, I don't really see those as "using the Virus", it is more backstory at that point.

I did use the Virus in my History of Traveller campaign though. I set up a history of the OTU that was similar to, but different than the official version. The campaign was basically a series of mini campaigns, each set in a different historical period with some loose themes and events connecting them. I used GURPS 4e and ran a more hard sci-fi game than traditional Traveller.

The first part of the campaign involved a pre-contact war between various powers in the solar system. In the fallout from all of this, several extremist groups were created, one of which focused on cyber terror. The PCs first encountered the Virus during the second arc set on a sublight generation ship. This was a very primitive, yet still virulent version of the Virus, and the players ultimately sacrificed themselves and the ship in an attempt to contain it by altering the ship's course. Of course they didn't know this was a precursor to the Virus, just that it was a computer virus they could not contain.

They would run into more evolved forms over the span of several arcs, but it wasn't until the final two arcs that the danger of the thing set in. They spent the second to the last arc trying to contain it. This was based heavily on the attempts to contain the Conficker worm. Finally, they spent the last arc trying to preserve as much of society from collapse as possible, Harry Seldon style, so that a seed would remain to be born again.

I really enjoyed that game. The Virus was really just an occasional side plot until the end. But, by planting the seed early, it didn't just seem to come out of nowhere. In some arcs it either didn't appear at all, or the players did not know they were dealing with it until several arcs down the line. Specifically, they found an entire planet of silicon based life that had been corrupted by it during the arc based on the early Starleaper missions.